How to File a Tax Return with Multiple Types of Income

Reporting multiple sources of income on a tax return may seem overwhelming. We’re here to help.

Most tax filers report income earned from an employer on a tax return. This information is listed on a W-2 form and is usually pretty easy to report on a tax return.

However, filing a tax return can become more complicated if you have more than one income source.

For example, many of those who work as independent contractors are also employed part-time. Both forms of income must be reported on a tax return.

Whatever your case may be, the IRS requires you to report (and pay tax on) all sources of income. Not just one.

If you avoided filing a tax return because you were overwhelmed by the confusion of reporting multiple types of income, you’ll still need to do so. Luckily, PriorTax makes filing multiple types of income easy.

To report multiple types of income on a tax return, simply create an account with PriorTax and enter your income information from each source. After your return is prepared by the PriorTax team, you’ll simply print, sign and mail it to the IRS.

Different Forms of Income

The following are forms of income you will need to report on a tax return;

• salary, wages & tips
• independent contractor income
• rental income
• interest or dividend income
• government payments
• retirement account withdrawals
• other income

Independent Contractor & Self-Employment Income

If you’re an independent contractor or your self-employed, you’ll received a Form 1099-MISC from each client who paid you at least $600 during the tax year. All of your income from each contract job you worked needs to be reported on your tax return. You’ll also need to pay income tax on it.

Whether you’re a freelance write, an artist or you hire yourself our to companies or individuals for contract work, you’ll be required to report and pay tax on your income received from these sources in addition to reporting and paying tax on other forms of income.

Rental Income

If you received rental income over the year, you must report the full amount on your tax return. If you received a deposit for first and last month’s rent , it’s taxed in the year it’s received.

Income from Interest or Dividends

If you own mutual funds or stock investments, you may have received dividends or other distributions. This income is reported on a Form 1099-DIV. Although this income differs from income earned from selling stocks, you’re still required to report it on a tax return.

Interest earned on a savings account is reported on a Form 1099-INT. This amount also needs to be included on your tax return.

Government Payments

If you received unemployment compensation at any point during the year, you are required to report the full amount on your tax return. The total amount received from government agencies is reported on Form 1099-G, sent to you by your state.

Even if you were only unemployed for part of the year, you’ll still need to report the government payments in addition to your wages on your tax return.

Retirement Account Withdrawals 

Most of the time, withdrawing money from your traditional IRS means paying tax on the amount withdrawn.

Form 1099-R is sent to you and reports the total amount withdrawn to report on your tax return.

Other Income

There are many different types of income that may not fall under the lists mentioned above. Chances are, if you received another form of income, such as gambling winnings, the IRS considers it “other income”. In addition to any other income you may have, you’re required to report your “other income” when filing a tax return.

Here’s a few types of income considered “Other Income”;

• canceled debt (reported on a 1099-C)
• jury duty pay
• nonbusiness rental income
• taxable distributions from a health savings account (HSA) or Archer MSA (reported on a 1099-SA)
• barter income
• insurance policy dividends if amount is more than the total of all premiums paid

Do Your Taxes Today!

Reporting multiple types of income on a tax return can seem like a lot of work, especially if in the past you only received income from one source. If you’re trying to do it on your own, it probably will be a lot of work.

Avoid wasting your time and energy and save yourself the frustration of trying to figure out how to file your own taxes. Instead, use PriorTax and the hard work will be done for you!

That means, if you still need to report multiple forms of income from a previous year, you can still do so with PriorTax. No need to pay an accountant high fees. Simply create an account today, we’ll help you from there!

Photo via Tax Credits on Flickr 

This entry was posted on Thursday, October 16th, 2014 at 6:47 pm and is filed under Tax Tips and Tricks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.